Category Archives: bailout

Wells Fargo CEO John Stumpf resigned on Wednesday and Elizabeth Warren finally got the scalp she wanted. Bank employees opened about two million unauthorized customer accounts on Chairman Stumpf’s watch. The scam led to bonuses for the employees and extra fees and overdraft charges for the unsuspecting customers.

Stumpf will get no severance package and he has forfeited $41 million in unvested equity. Also, the bank has fired 5,300 employees and agreed to pay a $185 million dollar fine.

Additionally the former CEO will be tied down naked in the desert over a termite hill.

I made up that last one. Stumpf’s not exactly losing the shirt off his back. He earned about $120 million during his career at Wells Fargo.

Wells Fargo Thrived After 2008 Crisis

A WSJ editorial says that, despite the scandal, Stumpf has been “one of the most successful American CEOs of recent times:”

Our colleague Dennis Berman reports that in nine years he produced some $149 billion in profits and saw an increase in market cap of $124 billion. Wells Fargo tried to turn down the government’s rescue funds during the 2008 financial panic because it didn’t need the help, only to be forced by Treasury to take the money.

“Without a credible threat to walk out of the single currency, Greece was eventually forced to cave in, and accept punishing terms from the rest of the European Union that will push its economy even deeper into recession.” – Market Watch

Greece’s Syriza Party Prime Minister Alexis Tsipras agreed to accept new conditions for a bail-out from Germany. The conditions are tougher than the ones Greek voters rejected in a referendum less than two weeks ago. The agreement also calls for a €50 billion investment fund to help Greece grow out of its mess. The fund is to endowed by the sale of Greek assets. Craigslist for Greeks.

The agreement requires approval of the Greek Parliament.

In a WSJ piece title “Another Greek Can-Kicking” Holman Jenkins thinks the deal will retard any return to health for Greece.

But if you still have money in Greek banks you might be willing, to sacrifice the economy’s return to long-term health to maximize your chance of reclaiming your life savings.

He also says the deal was less about Greece than preserving relations between France and Germany.

France stepped out as defender of Greece and promoter of fake plaudits… Germany likes to be seen deferring to France to quell any idea that Germany is becoming strident and imperialistic again.

It must be true – David Ignatius lays out the same notion in the Washington Post.

Last week Greece defaulted on its debt to the IMF. On Sunday Greek voters said “no” to more austerity from the IMF.

Surging socialist candidate Bernie Sanders applauds the Greeks for rejecting austerity from the Euro ruling class. Economics writer Stephen Moore says Greece needs less socialism and more privitization. The banks are shutting down and withdrawals are restricted. He says what’s happening in Greece is the usual outcome of socialism – economic collapse.

Roger Cohen in the NYT says the euro zone isn’t all that much into democracy anyway: “A vote cannot undo a debt or obscure colossal Greek irresponsibility.”

The IMF had demanded more taxes on Greek businesses. Moore says the country is already overtaxed. His solution is a Detroit style bankruptcy where pensioners and Wall Street investors all take a “haircut”.

Robert Samuelson says the Greek economy accounts for only 1.8% of the euro zone and its collapse might not have much effect on the rest of us. Greece only has a population of 11 million. Hell, we have 94 million out of work.

But this WSJ analysis says if Greece does leave the Eurozone the risk of contagion to more important economies is high.